Tuesday, 27 June 2017

What’s next? – GBPUSD 27.06.17

The pound/dollar was trading at 1.2747 as of 10:30 GMT, rising by 0.21 percent following the release of Bank of England’s Financial Stability Report and remarks from Gov. Mark Carney.

According to the document, the BoE intends to raise capital requirements for banks by 11.4 billion pounds as it expects a noticeable increase in consumer credits and as the country looks ahead of a tough Brexit negotiation process in the upcoming months.

“Fragmentation of market-based finance could result in higher costs and greater risks for both EU and UK companies and households,” the Bank of England stated.

The pair has been affected by heavy pressure in the last session as the dollar extended gains across the board despite downbeat economic data published on Monday.

Durable goods orders came in at 0.1 percent, and while they missed expectations for a 0.5 percent increase, they displayed a positive correction from previous month losses. With an optimistic eye, this factor contributes to the case of a third rate hike later this year.

According to Fed funds tracked by CME Group’s FedWatch tool, chances for a rate move in December are currently standing above 43 percent.

The GBPUSD is experiencing difficult times from any perspective. There are now so many factors weighing on the pair that it’s getting trickier to identify a clear direction. From a technical perspective, the pair is looking at the 1.28 resistance, which could be broken on the way to 1.30.

In the long-term, the pair could extend gains even above the mentioned mark, but choppy trade is likely to continue until bullish momentum builds up. Therefore, there would be plenty of opportunities to take advantage of short-term corrections and sudden spikes.